Africa is an exciting, complex, and evolving market with tremendous growth prospects, and a McKinsey report expects to continue seeing a new generation of winners emerge and scale.
Wallets are expected to experience the fastest growth in revenues, but cards will remain a core revenue driver, partly because of their high penetration relative to wallets in key markets such as Egypt, Morocco, and South Africa.
A McKinsey report expects to see strong growth across all electronic-payment methods in Africa, in response to different factors. For example, account-based transactions will see growth associated with improved real-time payments infrastructure, even though this is limited to a few countries and hampered by persistent low account penetration. Card-based payments will grow, fueled by the ease of use for end users (both offline and online) and better economics for issuers. E-wallets will see growth, enabled by their ability to integrate several payment methods into one—including mobile money, a solid value proposition in the deeply fragmented landscape of payment methods in Africa.
Looking ahead, McKinsey report surveyed experts think e-wallets, which will also integrate mobile money, will experience the fastest revenue growth in domestic payments. Cards, including virtual cards, are unique in their versatility: they can be linked to all available stores of value, including bank accounts and mobile money, and have better acceptance online, enabled by well-established processing networks and protocols. Take rates on online payments are also generally higher, which in turn is contributing to strong growth in card revenues. Many nonbank wallets are already linked to cards and mobile money rather than bank accounts. Lower know-your-customer (KYC) barriers, quicker first-use setup, increasing usability, and lower costs will continue to be important for the growth in wallets.
Currently, Cash is still king in Africa, a 2022 McKinsey survey suggests that its supremacy is likely to be challenged in the coming years as e-payments gain momentum.
Africa’s domestic e-payments market is anticipated to experience revenue growth of approximately 20% per year, growing from $20 billion in 2002 to $40 billion by 2025, as banks and nonbank players alike innovate to reduce friction in domestic and cross-border payments and deliver much-needed new solutions to consumers and businesses.
Ghana 🇬🇭 is a digital payments leader in West Africa, cash is still relied upon alongside mobile money apps like M-Pesa. Credit and debit cards are less popular, with under 6% penetration.
Kenya 🇰🇪 is the home of M-Pesa, and the country boasts mobile penetration of 90%. Kenya is a mature mobile payment market. According to EY global, 80% of adult Kenyans have a mobile money account with transactions via mobile devices representing 87% of their GDP. 22% of the population uses cards to pay online.
Nigeria 🇳🇬 is Africa’s largest economy, cash and mobile money are common, and local credit and debit cards are especially popular with Nigeria’s burgeoning middle class, accounting for more than 29% of total e-commerce sales.
Egypt 🇪🇬 has Mobiamo, OneCard, Fawry Pay, Local Cards, and several
Mobile Wallets
Wallets are expected to experience the fastest growth in revenues, but cards will remain a core revenue driver, partly because of their high penetration relative to wallets in key markets such as Egypt, Morocco, and South Africa.
